Finding ways to reduce shrinkage in retail comes down to understanding your risks and taking appropriate action to reduce them. When it comes to retail shrinkage, ignorance isn’t bliss. The less you know, the more you lose. You need to pay attention and be proactive with retail loss prevention in order to protect your bottom line.
The top causes of shrinkage include administrative errors, like record keeping, paperwork errors, and inefficiencies while counting and sorting cash, internal theft of goods and cash by employees, and customer theft through theft of items, price tag swapping, and other means. By targeting these three top causes of shrink, you can effectively find ways to reduce shrinkage in retail.
Need help? Consider these five ways to reduce shrinkage in retail. They can have a significant impact on your losses.
1. Invest in Inventory Management
Both customers and employees might steal some of your inventory. Customers might walk right out of the door with items that they didn’t pay for and employees might walk out the back with some of your products, pretending to take out the garbage or waiting until they’re the only one left to lock up to steal without witnesses.
Investing in an inventory management system can help you reliably track your inventory so you’ll know exactly what products you’re losing, when, and how often. You’ll be able to see discrepancies quickly and might be able to zero in on employees who are always working when inventory goes missing. Make it known that you’ll be checking your inventory levels regularly to deter theft.
2. Run a Loss Prevention Program
Running a loss prevention program with all employees is one of the best ways to reduce shrinkage in retail. Creating a loss prevention program can help your employees recognize and identify shoplifters and give them strategies to prevent customer theft. Such a program can also help them understand how they’ll be punished if they’re caught stealing. Let your employees know that you’re serious about loss prevention.
3. Install Security Solutions
Installing security cameras can warn shoplifters and employees with sticky fingers that they will be caught and prosecuted. Install cameras in obvious areas so they’re seen clearly—make sure to cover cash registers, your retail floor, your cash room, and even your back door.
4. Review Register Transactions Daily
Internal theft makes up for approximately 50% of all retail shrink. You can significantly reduce your shrink rate by paying attention to register transactions and making it known that you’re checking every day. Not all theft will occur from cash being directly stolen, though. So make sure to look at other types of retail fraud, such as voided, cancelled, and deleted sales as well as returned and discounted transactions.
5. Invest in Cash Management Technology
The more opportunities your employees have to handle your cash, the more tempted they will be to steal. Using a hands-off approach by investing in cash management technology can be one of the best ways to reduce shrinkage in retail. Let cash counters and sorters and currency recyclers handle the cash management activities, like dispensing floats, counting, sorting, and reconciling profits. Not only will cash management technology reduce your risk of employee theft, but it can also greatly increase accuracy, which will also reduce your losses due to human error.
Protect Your Retail Store
When it comes to protecting your company against administrative errors, internal theft, and shoplifting, using these five tips to reduce shrinkage in retail can help. Investing in an inventory management system, implementing a loss prevention program, installing security cameras, reviewing register transactions, and investing in cash management technology can help you boost your bottom line by reducing risks and shrinkage.